WuXi Biologics (Cayman) (HKG:2269) sheds 14% this week, as yearly returns fall more in line with earnings growth

It's been a soft week for WuXi Biologics (Cayman) Inc. (HKG:2269) shares, which are down 14%. Despite this, the stock is a strong performer over the last year, no doubt about that. Indeed, the share price is up an impressive 108% in that time. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.

Although WuXi Biologics (Cayman) has shed HK$16b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year WuXi Biologics (Cayman) grew its earnings per share (EPS) by 0.7%. The share price gain of 108% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's good to see that WuXi Biologics (Cayman) has rewarded shareholders with a total shareholder return of 108% in the last twelve months. That certainly beats the loss of about 9% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand WuXi Biologics (Cayman) better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with WuXi Biologics (Cayman) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.